# ProphetX

**Type:** Prediction market exchange  
**Status:** Pre-launch (DCM/DCO applications pending)  
**Focus:** Sports event contracts  
**Regulatory approach:** Compliance-first, purpose-built for CFTC registration  

## Overview

ProphetX is building the first U.S. prediction market exchange purpose-built for sports event contracts. Unlike Kalshi and Polymarket's "operate and litigate" strategies, ProphetX is taking a regulatory compliance-first approach by filing for both DCM (Designated Contract Market) and DCO (Derivatives Clearing Organization) registration before launching.

## Timeline

- **2024-2025** — Company founded
- **November 2025** — Filed CFTC applications for DCM and DCO registration, becoming first U.S. exchange purpose-built for sports event contracts
- **April 2026** — Submitted ANPRM comments proposing Section 4(c) "conditions-based framework" for sports event contracts

## Regulatory Strategy

ProphetX's Section 4(c) proposal represents a novel regulatory approach:

- Uses Section 4(c) of the CEA to create uniform federal standard specifically for sports event contracts
- Proposes codifying recent CFTC staff no-action relief into binding requirements
- Creates express federal authorization that overrides Rule 40.11's "shall not list" prohibition
- Recommends industry-wide best practices: consumer protection standards, anti-manipulation mechanisms, league partnership requirements

This approach differs from existing operators by proposing a specific carve-out rather than relying on broad field preemption arguments.

## Positioning

Presents itself as a model for compliant innovation — purpose-built for regulatory engagement rather than regulatory arbitrage. Represents a strategic alternative to Kalshi's litigation-based market entry.